February 10, 1999

Judge Rules Midwest Pork is not a "Sham" Company

Wright County District Court Judge Gary L. McMinimee has dismissed a State lawsuit that sought to enjoin Midwest Pork, L.C., from constructing hog facilities in Iowa.

Midwest Pork was created July 3, 1997, under the ownership of Peter DeCoster, son of Austin J. DeCoster. Austin DeCoster does business as DeCoster Farms of Iowa and also owns Iowa Ag-Construction Inc., an agricultural construction company.

The State filed a lawsuit November 7, 1997, alleging that Midwest Pork was a "sham" company created so that Austin DeCoster could avoid state law that prohibits a person from constructing or expanding an animal feeding operation structure if the person is party to a pending action for violation of state environmental laws. Several enforcement actions remain pending involving alleged violations by DeCoster Farms of Iowa.

In a trial conducted last November, the Attorney General's Office presented several facts in support of its argument, including: that Midwest Pork had purchased nearly all of Austin DeCoster's available confinement sites; that the purchase money was wired directly from Austin DeCoster's bank account; that the construction contracts are with Austin DeCoster's company, Iowa Ag-Construction; that almost all the site plans were certified before Midwest Pork was formed; that Austin DeCoster personally financed 100% of the construction costs; and that Peter DeCoster continued throughout the transactions to function as general manager of DeCoster Farms of Iowa.

Judge McMinimee ruled that the facts "could represent transactions between a father and a son intended to assist the son in getting started in a business which his father cannot pursue," and not only as a transaction to accomplish a wrongful purpose as alleged by the State. The Judge made other findings in support of his ruling that Midwest Pork can be considered a legitimate business and not a sham corporation nor a corporation "being used to promote illegality."

Judge McMinimee entered his ruling January 29th. The Attorney General's Office is reviewing the ruling and has not decided whether to appeal.